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HomeMy WebLinkAboutrda min 1995/07/25 CC MINUTES OF AN ADJOURNED SPECIAL JOINT MEETING OF THE lIEDEVELOPMENT AGENCY/CITY COUNCIL OF THE CITY OF CHULA VISTA Tuesday, July 25, 1995 Council Chambers 10:38 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL: PRESENT: Agency/Council Members Alevy, Moot, Padilia, Rindone, and Chair/Mayor Hotton ALSO PRESENT: John D. Goss, Director/City Manager; Brace M. Boogaard, Agency/City Attorney; and Beverly A. Authelet, City Clerk 2. APPROVAL OF M1NUTES: June 3, 1995 and July 11, 1995 MSUC 0tlorton/Rindone) to approve the minutes of June 3, 1995 and July 11, 1995 as presented. BUS1NESS 3. WRITTEN COMMUNICATIONS: None PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES 4. PUBLIC HEARING: JOI/~F REDEVELOPMENT AGENCY/CITY COUNCIL HEAlLING PURSUANT TO THE CHULA VISTA MUNICIPAL CODE AND CALIFORNIA HEALTH AND SAFETY CODE SECTION 33431 AND 33433 REGARDING THE PROPOSED DISPOSITION BY THE AGENCY OF CERTAIN REAL PROPERTY LOCATED AT 760 BROADWAY COMPRISED OF APPROXIMATELY 2.53 ACRES TO BROADWAY VILLAGE BUSINESS HOllIES, L.P. AND THE PROPOSED DEVELOPi~,IENT OF SAlD PROPERTY INTO A 36-UNIT MIXED-USE BUSINESS HOMES PROJECT, SUCH PUBLIC HEARING TO CONSIDER THE FOLLOWING SPECIFIC PROPOSED ACTIONS:--The City Council and Redevelopment Agency are requested to hold the requisite public hearings and take the actions necessary to approve the Broadway Business Homes Project and authorize execution of a Disposition and Development Agreement with Joelen Enterprises (Josef and Lenore Citron) for the development of the project. Actions required include a zoning change for the project from Thoroughfare Co~nmercial to Central Commercial-Precise Plan; a Special Use Permit with Shard Parking Agreement to establish the nfixed-use project; and approval of a Precise Plan with Conditions for development of the Prc~ject and approval of the DDA, and sale of the property without public bidding. Staff reconmaends the Council and Agency approve the resolutions and place the Ordinance on first reading. (Community Development Director) 1. Review and adoption of Mitigated Negative Declaration and Addendum IS-95-03 2. Approval of an atnendment to the zoning ~nap or maps established by Section 19.18.010 of the Chula Vista Municipal Code by rezuning the 2.532 acre parcel located at 760 Broadway within the Southwest Redevelopment Project Area from C-T (Commercial Thoroughfare) to C-C-P (Central Commercial with Precise Plan) 3. Issuance of a Special Use Permit to construct a 36-unit commercial/residential mixed-use project with Shared Parking Agreement 4. Approval of a Precise Plan to allow construction of a 36-unit mixed-use pro. ject including associated site improvements 5. Approval of a Disposition and Development Agreement between the Agency and Joelen Enterprises A. RESOLUTION 17964 RESOLUTION 1460 ADOPTING MITIGATED NEGATIVE DECLARATION AND ADDENDUlXl IS-95-03 FOR A 36-UNIT BUSINESS lfOMES PROJECT AT 760 BROADWAY Minutes July 25, 1995 Page 2 B. ORDINANCE 2636 AMENDING THE ZONING MAP OR MAPS ESTABLISHED BY SECTION 19.18.010 OF THE CHULA VISTA MUNICIPAL CODE BY REZONING THE 2.53 ACRE PARCEL LOCATED AT 760 BROADWAY WITHIN THE SOUTHWEST REDEVELOPMENT PROJECT AREA FROM C-T (COM/VIERCIAL THOROUGHFARE) TO C-C-P, CENTRAL COM/VIERCIAL VVITH PRECISE PLAN (First Reading) C. RESOLUTION 1461 MAKING CERTAIN FINDINGS AND GRANTING A SPECIAL USE PERMIT FOR THE DEVELOP/~,!ENT OF A MIXED-USE PROJECT KNOWN AS THE BROADWAY BUSlNESS HOMES PROJECT, LOCATED AT 760 BROADWAY WITHIN THE SOUTHWEST REDEVELOPMENT PROJECT AREA TO BROADWAY VILLAGE BUS1NESS HOMES, L.P. D. RESOLUTION 1462 RESOLUTION 17965 APPROVING A PRECISE PLAN FOR THE BROADWAY BUSINESS HOMES PROJECT AND A DISPOSITION AND DEVELOPMENT AGREEMENT WITH BROADWAY BUSINESS HOMES, L.P., AND AUTHORIZING THE CHAIR TO EXECUTE SAME E. RESOLUTION 1463 WAIVING THE CONSULTANT SELECTION PROCESS, AUTHORIZING EXECUTION OF A TWO-PARTY AGREEMENT BETWEEN THE REDEVELOPI%IENT AGENCY AND WOODWARD-CLYDE CONSULTANTS FOR SOIL TESTING AND REMEDIATION CONSULTING SERVICES AT 760 BROADWAY, AND APPROPRIATING FUNDS THEREFORe-Demolition of buildings at the Fuller Ford site will necessitate removal of contaminated soils. It will be necessary to have a qualified hazardous materials consultant present during demolition. Staff recommends approval of the resolution. Not a part of the Public Hearing, but a related item. (Community Development Director) Mr. Boogaard called for a point of order which was a conflict issue. Mr. Padilla's father was a high ranking official in Chicago Title which happened to be the title company the Citron's were dealing with for the proposal. It was not a financial conflict because Mr. Padilia would not receive any financial gain whatsoever from the transaction. Under the Conflict of Interest Law, the Political Reform Act, it was not a conflict of interest and he would be entitled to participate. Upon reading page 37 the proposed Disposition and Development Agreement there was a provision on Conflict of Interest which was drafted broader than the Political Reform Act in order to try and achieve a greater sense of propriety in dealing with a Disposition and Development Agreement. That could have been interpreted, Mr. Padilia believes, to include personal familial interests versus, albeit it indirect, personal financial interests which the Political Reform Act dealt with. In the absence of a proposal to modit~, paragraph 7.2, it might be interpreted to be broader than the political retbrm act. Mr. Padilla's concern was that the way it currently read, even though the contract was not in force, the minute it was approved he might be violating that particular clause. He did not want to do that and proposed to abstain from participation in the issue. It was his opinion that the personal familial interest was not intended to be covered by the clause and in order to give Mr. Padilia peace of mind to participate he recommended that the words "personal interest" be amended to read "personal financial interest". MSC (Moot/Alevy) to add the word "tinancial" between "persoual" and "intere,st" in paragraph 7.2 of the Development and Disposition Agreement. Approved 4-0-0-1 with Padilia abstaitfing. Chris Salomone, Director of Community Development, stated they were at the end of a very difficnlt process. Most redevelopment projects had complications and involved innovative and creative solutions. The main issues unresolved on the Broadway Business Home project centered around some development agreement provisions. The most significant of those dealt with the process for the acquisition of the property. Staff was prepared to discuss those with the Agency and make recommendations. That had been done in Closed Session previously and may be the Agency's wish again. Member Rindone stated the Agency/Council had given direction to staff at the last meeting and questioned if it was staff's belief that there was significant new information since that direction. Mr. Salonnone responded that staff wanted to have the opportunity to articulate the differences. He felt there were tbur different proposals that had been somewhat defined in front of the Agency/Conncil. The Agency/Council direction had been clearly cmmnunicated to the applicant. Minutes July 25, 1995 Page 3 · Katrina D. Newby, 2270 Fifth Avenue, San Diego, CA, Executive Director of the Home Business Network, supported the Broadway Business Homes. She served as the Home Business Consultant for the Small Business Development Center at Southwestern College where she consulted on a daily basis an average of ten home based business owners. Home based businesses were spreading rapidly and was not just the morn/pop operation. The problem was that they were growing out of their homes. She felt the project was very valuable because it gave people the opportunity to stay in Chula Vista and at the same time have commercial space. She hoped the project would not be held up. On an average there were 50-60 new home based businesses started up weekly in the area. · R.E. Chandler, 3971 Darwin Avenue, San Diego, CA, stated he owned a business on Broadway from 1970 - 1979. He felt the project would offer a great opportunity for the small businessman. He wanted to see the project go forward as he was very interest in possibly purchasing a unit. · Joseph S. Fialho, 723 1/20stend Court, San Diego, CA, stated the project was needed to bring Chula Vista in competition with the bigger cities. · Patty Davis, 1375//17 Callejon Montefrio, Chula Vista, CA, stated after reviewing the project she felt it would be an asset to the western portion of Chula Vista. She had clients that were interested in a home based business. The City was viewed as being very progressive and urged Agency/Council support. · Rod Davis, 233 Fourth Avenue, Chula Vista, CA, representing the Chula Vista Chamber of Conunerce, stated the County was building 17 units of low/low income housing on Painmar and Broadway which would bring 17 new families to shop at the Broadway Business Homes. The Redevelopment Agency was not in business to make good deals, that was what private industry was for, they were in business to cure blight and improve the quality of life and living conditions in the community and he felt that was what the project would do on Broadway. Forty percent of the new business licenses per month were home businesses. The project would succeed and made the City of Chula Vista a leader and model throughout the State. The Chamber urged Agency/Council support. · Joanne Clayton, 760 FiRh Avenue, Chula Vista, CA, President of the Broadway Business Association, stated Broadway with over 650 businesses represented a large percentage of the business revenue in the City. The Broadway Business Home project had the full support of the Association because it represented a new and unique opportunity for the area. They felt it was necessary for all business projects wanting to locate in the City to know that the City was business friendly and could work with the developers in a positive and rapid way. The Broadway Business Association urged the Agency/Council to move forward with the project. · Josef Citron, 761 Golden Park, San Diego, CA, Applicant, revisited the project. Two weeks ago he felt everyone was a victim of a ~insunderstanding. They had spoken with most of the Agency/Council Members individually to shed light on the project. They were dedicated to the project and had made a proposal on their proposal which they felt went a long way in meeting the concerns expressed as the result of the last meeting. He was appealing for the Agency/Council to work with them. They had not advertised the prqject, but word-of*mouth had already brought them interest in purchase of four of the first six units. They felt the prqject would be an enormous success and the benefits to the City would be quite great. Chair/Mayor Hotton questioned if it could be discussed in open session. Mr. Boogaard responded that it could but if the Agency/Council gave staff' new instructions the applicant would be hearing them. If the Agency/Council wanted staff to achieve any negotiating advantage it would be lost by discussing it publicly. He recommended that staff describe the negotiating movement in Closed Session. * * * Council met in Closed Session at 11:02 p.m. and reconvened at 11:52 p.m. * * * Mr. Salomone stated it was the position of the Agency/Council that in their previous deliberations that the Agency/Council considered all the elements of the project, i.e. the demolition of the site, remediation work, cost and value of the land. In that meeting staff conveyed to the developer the Agency/Council reconm~endation that the land be acquired in two parts, $275,000 for the first half and $275,000 tbr the second half for a total land cost of $550,000. They revisited all those items in Closed Session and a new proposal the applicant offered and the Agency/Council reiterated the position that they came to previously. After reviewing that the write down and Minutes July 25, 1995 Page 4 participation on the part of the City, the demolition of the site, risk the City was taking and the opportunity costs that the City was involved in they still wanted to see the site purchased in two phases with $275,000 in advance of the first half and in advance of the demolition. Mr. Citron stated they had arranged financing for six units first. They did not have the financing arrangements to take down half the property at the present time. If thaf was the Council's position they would have to go back to the lender and re-look at the financing and investment situation. It began to get less affordable to be able to sell the units at a reasonable price which was what they wanted to do. He questioned if there was a way the Council could consider the request, at least for them to take down the property with the six units and then do the other two portions which would allow them to do the marketing and modify the rest of units to accommodate the buying public and keep it market driven. As far as the Agency not being willing to participate as had been part of their understanding originally, it was something that they could look at and do what they could, but to require that they change from three phases to two would make them go back to square one with the financing. They had already lost three lenders and the project was trader hardship at the present time. He strongly requested that the Council allow them to take down the property in three phases. The pay down suggested in their proposal was $92,000 which would be the biggest part, if not all, of the demolition costs. That would be paid in cash up front in order to get the project underway. They would get the project underway just as soon as the demolition was completed. If the Council could not do that they would have to see if there was some other way of doing the project under the new terms. Chair/Mayor Horton stated with the $275,000 it did not mean they had to build the whole 50% at one time. They would have the option to build six units. Mr. Citron stated he understood that, but to carry that purchase price during that p~riod of time would boost the price and the buyer would have to pay more for no more product. They wanted to make them affordable. Member Moot questioned if they could defer the cost to the second phase. Mr. Citron responded that they would try to amortize it over the entire project, but they already had over $86,000 in costs which had to be added on to the price for which the buyers were getting no benefit. It had been sixteen months and to add that on would be one more straw to break the camels back. The amortization of that over the 36 units would mean they would have to get a great deal more financing. The City's risk was minimal. They also felt their risk was minimal because of the salability of the project as long as they could hold their prices. Member Rindone stated the Agency/Council was not convinced at the present time that the risk to the City was minimal. He questioned if there would be an interest in doing a third of the project with 12 units instead of six. Mr. Citron responded that they would have to redesign the project. The first building was six units and the next building was eight units. They were ready to go for building permits once the decision was made. Member Rindone stated the majority of the members of the Agency/Council were still interested in the project, but were not convinced that the risk was as minimal as being projected. The description of the proposed terms by staff did truly reflect the majority of the Agency/Council. Mr. Citron stated they would only be taking down the land tbr the first six units and would in no way be hurting the rest of the land. It was his understanding that the tire store owner to the north wanted to take all or as much of the property he could get. The Conununity Development Director expressed to him that he felt the risk was minimized because there was another buyer. Chair/Mayor Horton stated that other offers did not play into the decision made by the Agency/Council. They were two totally different issues. Their concern was their financial responsibility to the taxpayers. Member Moot stated the Agency/City demolition costs and out of pocket expenses exceeded what the Citron's were willing to pay and that jeopardized the taxpayers money. That did not look like a good economic deal to the Agency/Council. Minutes July 25, 1995 Page 5 Mr. Salomone stated the total contract was for $107,000 and the site remedialion brought it up to $124,000 which was the total up front costs to the City. Mr. Citron stated they had been working with the demolition contractor and they felt by working together they could save money for the City and the project. It was his understanding that they expected the costs to be around $86,000. The amount of money for the release on the six units of land would be almost $92,000. The City would only be releasing that portion of land and most of that did not have a lot of demolition required. Member Moot stated the Agency/Council would lose money if they only built six units. Mr. Citron stated they had been in the business for over thirty years and had been building in San Diego since 1972. They had yet to start a project they did not finish or purchase anything that they did not complete. They were basing all of the their projections and their willingness to go into the project on their experience. They would build 36 business homes and sell them. He projected they would be out of there by next March. He requested that the Agency/Council help them. By making one slight compromise to their position and allow them to go ahead with a loan that was already set they could go forward with the six units. The change would take them as much as three or four months to start over again. The)' would build the 36 units and pay the City for the land. If they made any more money the City had a recapture in the agreeanent. He requested that they be allowed to take down the project in three phases, i.e. six, twelve, and eighteen units. Member Padilia stated there was a great deal of respect for Mr. Citron, his investors, and their accomplishments. The Agency/Council had to reach a decision as to what was a prudent risk to take and where the risk appropriately belonged. Members had given staff direction and he did not feel it prudent for the Agency/Council to publicly debate the staff estimates of potential costs, risks, or losses or to renegotiate the position taken. The integrity of the Agency/Council needed to be solid when a decision was made and to be consistent in order to maintain credibility. He felt the majority of the Agency/Council wanted to see the project work but there were responsibilities that were real, risks that were reel, considerations that were real and they would be remiss in their responsibilities if they ignored them. Mr. Citron appreciated Member Padilla's comments. He l~It the written record and video would show that was his concern, i.e. the consistency. He was questioning the consistency of action due to the change of position taken by the Agency/Council. It was not consistet, t with what they had been told, promised, or what action was taken. If they had known that six to nine months ago when they first calne before the Agency/Council or fifteen months ago when they presented their written proposal and had it responded to in May, June, or July rather than the following February they could have made their plans perhaps to do the deal as currently reqnested, Because it was not presented to them that way he requested the Agency/Council consideration. All of the work that was done was based on what they understood the Agency/Council wanted. Chair/Mayor Hotton stated the tinancial aspects disclosed to the Agency/Council were a great surprise. The majority of the Agency/Council I~lt it was a full cash transaction, i.e. that the City was being paid the hill purchase price up front. The Agency/Council never acted on the type of financing, payment, or how the property would be brought down for the units. Direction was never given. Mr. Citron stated he had been told that and most Members had been good enough to meet with them to discuss the documents they had been working under. He was trying to put the best face on it and call it a misunderstanding. It was a very embarrassing situation for thein as well and they came back with a cotinter offer. It was now set up to do six units with two other phases. Lenore Citron, 761 Golden Park, San Diego, CA, Applicant, stated no one brought up the price other than the letter that had been written to them. No one bronght up the price of $275,000. They had a letter that said one thing and it got all anixed up and they ended up with egg on their faces and she resented it. They were good business people and they had done what they said they were going to do. At the eleventh hour it was not a good thing to do to people that wanted to do a good thing fbr the City. Chair/Mayor Hotton stated they were not disputing the filet that they were good business people. She was sorry that there was a problem with mis-conmmnication, but it was something the Agency/Council never discussed. Minutes July 25, 1995 Page 6 Mrs. Citron stated it was not something that they were thinking but something that they had read that came from the City staff. Chair/Mayor Hotton stated staff had reiterated the Citron's request. The letter contained a disclaimer at the beginning of the letter that stated it was not an offer, had not been to Council, or discussed by the Council. They were reiterating the Citron's discussions with staff. Mrs. Citron stated that was not how the letter read. Mr. Boogaard read the paragraph from the letter: "Dear Josef and Lenore, This letter responds to the various issues which you have raised concerning the above referenced proposal. This response is not to be considered an offer on the part of the Agency or the City to enter into an agreement with you regarding your proposal, but merely represented a sumranD, of the current status of the main points of a Disposition and Development Agreement that you have proposed between you and the Agency concerning the project." Mrs. Citron stated that was not the whole letter. She stated that it was required that land be delivered that was clean and that the land was not clean or the Agency/City would not have had people out examining it. It was a responsibility that belonged to whoever the previous owner was. SomeofwhichtheAgency/Citywasmakingtheir responsibility was not their responsibility. The letter said "It is contemplated that the site will be delivered to the developer demolished and cleared at the Agency's expense". City people wrote it she did not. It also said "On the price reduction, the Agency acquired the site for $1.8 million and presently contemplated to permit development on the site. The Agency would convey the site to the developer for a purchase price which is something less than that amount. One-half of this purchase price would be paid upon conveyance of each half of the site. Purchase price payment will be deferred until production unit sales." She stated that was very confusing to her and she did not understand how that was interpreted to come up with $275,000. In good faith they had stated they would pay for the first six units with cash and asked the Agency/Council to work with them. Mr. Boogaard advised the Agency/Council not to argue the point from the dais although there were very valid counterpoints. It would not behoove anyone to argue the points publicly. Mrs. Citron questioned why not, she felt the taxpayers should k~aow what was going on. Chair/Mayor Horton did not feel a response was necessary. She was sorry there had been a mis-communication between the Redevelopment Agency and the developer. Member Rindone had been the strongest proponent for the project and he did not know the proposal for financing the project. Mr. Citron stated that was not in their proposal, it came from the Agency. Their original proposal was to buy the property and the letter was a counter proposal from the Redevelopment Agency. He reqt~ested that they get back to operating on good faith. They would pay cash for the first phase. Chair/Mayor Horton stated the paragraph read by the Agency/City Attorney preli~ced the letter by stating it was the Citron's proposal to the City. Never in the letter did it say that the Agency/Council agreed to any of the items listed. Mr. Salomone clarified that one of the things that was being represented and important to state was that any prqiect, and this project was extremely difficult because there was no model for it, began with various negotiations. The original project did not begin looking anything like the project presented at the present time. The developer worked countless hours with the staff to deal with issues such as parking, set backs, open space, and amenities. The project was falling apart week by week. Staff changed the things in the letter substantially. Staff agreed to make a public street at the developers request and agreed to work with a maintenance district. Those were all nnique to the project and things staff had never enconntered. To have documents such as the letter and meetings held and not know whether or not there was a project until late in the process and then to sit down and negotiate a development agreement and get the development from the agreement that did not replicate that method of acquisition was normal. Projects evolved and changed and to say that there was bad faith or misrepresentation becanse of a document early on in the process begged to open np the other issues that also changed throughout the process. It was a good Minutes July 25, 1995 Page 7 process and there was good faith on both sides, but it was being mis-characterized that the process was somehow breached because of the letter. Mr. Citron stated he respected Mr. Salomone very highly. The only reason they brought up the letter was because he thought the Agency/Council felt they had been sandbagged by the change in what they understood the deal was at the very last minute. They had told staff that and told them why that happened. They were acting in good faith and used the letters as proof o15 that. It was not who was right but what was fight. There being no further public testimony, the public hearing was declared closed. ORAL COMMUNICATIONS None OTHER BUSINESS 5. DIRECTOR'S/CITY MANAGER'S REPORT(S) - None 6. CHAIR'S/MAYOR'S REPORT(S) a. Discussion of Broadway Business Homes Project (Citron). The request is to discuss in Closed Session, 7. AGENCY/COUNCIL MEMBER COMMENTS Member Rindone a. Member Rindone stated the ~gency had received a memorandum from the City Attorney regarding the issue of spending tax increment outside of a project area and it was his understanding that the Agency had asked the staff for a report. He questioned when they could anticipate the report. Mr. Goss stated it was staff's interpretation that it had already been dealt with. Member Rindone stated he did not know how much money was applicable to the previous or current budget years and what that implication would be to the Redevelopment Agency. Mr. Goss responded that would have to be bronght back. It was his understanding that the Agency took action that instead of incrementally phasing out the tax increment paying tbr general economic development that it all be done one time. Chris Salomone, Director of Community Development, stated staff was preparing the report and it would have a criteria for the amount that was attributable to the redevelopment areas directly under AB 1290 and the amount that should be paid for by the General Fund. Staff was still researching that and developing the criteria and he felt it could be brought back in 2-3 weeks. Member Rindone requested that it be an agendized item for review by the Redevelopment Agency. Mr. Goss stated he appreciated the enthusiasm of the Cmnmunity Development Director, but he insisted that they give it budget review and the Budget Director was on vacation. He felt it would be approximately one month before returning to the Agency. Member Rindone stated one month was acceptable but he did not want to let it go longer than that. Minutes July25, 1995 Page 8 ADJOURNMENT AT 12:25 A.M. to the Regular Agency Meeting on August 1, 1995 at 4:00 p.m., immediately following the City Council meeting, in the City Council Chambers. Respectfully submitted, BEVERLY A. AUTHELET, CMC/AAE, City Clerk Vicki C. Soderquist, CMC, ~y City Clerk